What to Do About Healthcare if You Retire Before Age 65

June 16, 2023
Posted in Medicare
June 16, 2023 Jonathan Nolan

What to Do About Healthcare if You Retire Before Age 65

An early retirement sounds like a dream come true for many people. For others, it’s simply a necessity for one reason or another. But if you’re due to retire before age 65, or simply thinking about it, there is one crucial factor to consider: What will you do about healthcare if you retire before the age of Medicare eligibility?

If you find yourself in this predicament, or heading in that direction, you do have options.

Ask about COBRA. If your employer is COBRA-eligible, you can continue enrollment in their group healthcare plan for 18 months after your employment with them ends. And in certain situations, that coverage can extend to 36 months. However, in many cases the COBRA coverage is more expensive, because you’re now paying the full premium without an employer contribution. So do estimate the costs before making a decision.

Join your spouse’s healthcare plan. If your spouse is still working for an employer that offers healthcare benefits, you could simply join their plan. Be aware that their plan might not offer coverage equal to your old one, but there can be various ways to deal with that. A health savings plan can help (more on that later) or you might be able to enroll in additional supplementary policies such as a dental or vision care plan.

Shop for a plan through Covered California. Our statewide health insurance exchange offers a plethora of options for healthcare coverage. And depending upon your income and household size, you might qualify for a subsidy to help with the cost of your premiums. If you plan to relocate in retirement, check with that state’s exchange or shop on the federal exchange, if applicable.

Enroll in a health savings account (preferably now). If you’re enrolled in a low-premium, high-deductible plan now, you can go ahead and set up a health savings account. This account allows you to save pre-tax dollars in an account to be used toward qualified healthcare expenses. And if you don’t use all of your funds during any particular calendar year, the money rolls over to subsequent years. In this way, a health savings account can save you money now, while also serving as a retirement savings vehicle to be used toward healthcare costs in the future.

If you’re considering an early retirement, before the age of Medicare eligibility, call us to discuss your healthcare plan options first. We can help you figure out how to proceed in the most affordable way for your situation.





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